Japanese equities have risen a "bit too fast" and appear to be somewhat "bubbly," according to the former vice finance minister of Japan, Eisuke Sakakibara, as the Nikkei crossed the key 15,000 level for the first time since 2008 on Wednesday.
"The movement of equity prices seems to be somewhat bubbly - there will be some corrections in the equity market in the months to come probably by the summer," Sakakibara told CNBC Asia's "Squawk Box" when asked about the negative consequences of "Abenomics" - Prime Minister Shinzo Abe's aggressive policies to reflate the economy.
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He added, "But this kind of correction is healthy. With some correction it will again start to move upwards."
Japan is the world's top performing equity market this year - rising 45 percent since the start of 2013 - dwarfing gains on U.S. markets which have risen about 16 percent year to date.
The market has benefited from robust foreign inflows as investors turned optimistic that weakness in the yen would provide a boost to corporate profitability.
Discussing his views on continued weakening of the yen, Sakakibara - who is known as 'Mr Yen' for his efforts to influence the currency's exchange rate through verbal and official intervention in the late 1990s - said the depreciation that has taken place thus far is positive, but added it would be undesirable for dollar-yen to rise to 110-115.
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"Some depreciation of the currency is desirable, and so far so good. If the depreciation stops around 105 it will not create a major problem for the Japanese economy," he said, noting that he expects the dollar-yen to trade in a range of 95-105 in the coming months.